MPI reported a weaker-than-expected set of results, posting
a YTD loss of RM33.3m as fixed costs remained high while assets were
under-utilized. Nonetheless, a second interim dividend of RM0.05/share was
declared. We anticipate a potential turnaround in 2HCY12 on the back of a slew
of positive demand drivers. We are maintaining our TRADING BUY call on the stock but we are revising our FV
from RM3.70 to RM3.64 as we rollover our valuation to FY13 (pegged to 1.1x
P/NTA). We advise investors to accumulate
MPI shares in the event of a pull back in the share price today.
Poor overall
performance. MPI’s 3QFY12 revenue was below our expectations but inline
with consensus, making up only 68% and 72% of the respective full-year
estimates. However, its headline earnings disappointed and fell short of
consensus and our expectations on the back of sequential losses. Having
experienced weaker demand from the US
and Europe for the third
consecutive quarter, the company’s revenue fell marginally by 1.2% q-o-q
to RM275.8m (-17.6% y-o-y, YTD: -18.9%
y-o-y). This suggests that its assets were under-utilized while its fixed costs
remained high. However, the impact to
the bottom-line was somewhat cushioned by a sequential improvement of RM8.8m that, we
suspect, arose from a shift in product mix to
highermargin segments. It also declared a second interim dividend of
RM0.05/share during the quarter.
Recovery in the
pipeline. Revenue contribution from the US declined by 7.1% q-o-q to RM68.4m
(-8.8% y-o-y, YTD: -12.0%), while that of
Europe fell by 5.5% q-o-q to RM71.3m (-30.8 y-o-y, YTD: -30.2%). On the
other hand, top-line contribution from Asia grew 4.6% q-o-q to RM136m (-13.2%
y-o-y, YTD: -14.8% y-o-y). We still
maintain our view that semiconductor sales would improve in 2HCY12, premised on
a set of leading indicators that point to increasing demand moving forward.
Furthermore, the book-to-bill ratio of semiconductor equipment manufacturers is
above the parity level for the second month in a row. Note that recovery in the
semiconductor space may be swifter than expected,
since major upstream players from the US are guiding for sequential revenue growth
of approximately 3%-12% (please refer to our sector report entitled,
Turning Positive, on 5 April).
Maintain TRADING BUY
with revised FV of RM3.64. We are revising downwards our FY12/FY13 earnings
forecasts by RM30.2m/RM1.2m to realign
with our estimates and factor in the weaker financial performance for
9MFY12. We were overly generous with our opex assumptions prior to the results
release, which led to the variance in our earnings
projections vs the actual figures. Since we are fast approaching FY13, we feel compelled
to roll over our valuation to the
next financial year. Consequently, our fair value is revised from RM3.70 to RM3.64, based on
1.1x FY13 P/NTA. Maintain our TRADING BUY recommendation.
Source: OSK188
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